Are you a builder contractor or construction business in the United States looking for builder’s risk insurance? If so, our insurance team at Contractors Liability® is ready to answer some common questions for you and provide you with a free quote as well.
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What is Builder’s Risk Insurance?
Builder’s risk insurance is one of the lesser known types of property insurance. It is something you never need unless you’re a home builder, property developer or lender. But as a home owner or someone that is planning to hire a contractor to build your new home or remodel your existing home, a builder’s risk policy is something that you have to get familiar with. The limited nature of Builder’s risk policy means a lot of people have little to no idea of what it’s all about. If you’re a homeowner planning to do some upgrade on your home or a contractor hired to do some remodel or get involved in a home building project, builder’s risk insurance should be the first thing you have to put in your checklist. If builder’s risk is something that is unfamiliar with you, well lucky you, because below are the things you need to know about this type of insurance.
Who Should Get Builder’s Risk Insurance?
- Builders / General Contractors
- Lending Institution
- Development Companies
- Investment Companies
- Anyone that has an insurable interest on the property or someone that will suffer financial loss if a damage or certain type of loss occurs to the covered property
What Type of Properties Are Eligible?
- Residential and Commercial Buildings
What Type of Projects Need Builder’s Risk Insurance?
- New Construction – Building from the ground up, no existing structure, just building from the dirt.
- Remodel – Remodeling of interior finishes, exterior painting, replacement of interior fixtures, cabinets, flooring, roof replacement, ground floor additions and all non-structural changes such as HVAC, plumbing and electrical.
- Restructuring – Repair, replace, remove load bearing walls, adding additional stories, adding stairways or elevators, and foundation work.
- Installation – It provides coverage for contractors’ property or property of others within the custody or care of the contractor that is awaiting installation. Examples are installation of solar panels, sewer lines, pipeline, cellular tower, and the list go on.
What are mainly covered with insurance policy?
- Amount of renovation or improvements – includes labor and building material’s replacement cost
- Existing Buildings or Structure Amount – Please note it’s usually in Actual Cash Value, which is the replacement cost minus the depreciation cost of the existing structure.
*The amounts above are summed up to get total completed value of all covered property. Thus, the total completed value or the total of all costs of building construction including labor and materials is usually the limit of insurance.
- Property owned by contractors, sub-contractors, sub-subcontractors, and suppliers.
Included at no extra charge at a standard limit. Talk to your agent if you need to increase the limit.
- Back-up or overflow of sewer, drains or sumps – coverage from water that backed-up or overflowed from a sewer,drain or sump
- Debris Removal – coverage to remove debris of covered property after a covered cause of loss
- Fire Department Service Charge – fire department service charges resulting from the fire department being called to to save or protect covered property from a covered cause loss
- Temporary structures – scaffolding, construction forms and temporary structures while at the covered location. It will also cover the re-erection of scaffolding that resulted in a covered loss.
- Pollution clean up and removal – expenses to extract pollutants from land or water if the pollutant is caused by covered by a covered cause of loss during policy period
- Property at a temporary storage location – property temporarily at other premises if the property has been designated to be installed at covered location
- Property in transit – in transit except imports or exports while ocean marine coverage applies
There are also optional coverage available like:
- business income,
- extra expense,
- expediting costs,
- soft costs like consultant fees,
- legal and accounting fees,
- license and, permit fees,
- Better Green Endorsement.
After a loss or damage, this optional and proprietary provides coverage for additional costs and expenses associated with the construction of a new Green Building, which uses processes that are environmentally responsible and resource-efficient models of construction, renovation, operation, maintenance and demolition. Coverage includes air quality management, debris recycling, re-certification fees and more under a single aggregate limit. Talk to your agent to discuss about adding these coverage.
What are the requirements to get Builders Risk Insurace?
- Builder have to have at least 2 years of construction or home building experience. Builders with no history of loss in the past five years is a big plus.
- Name insured should have an insurable interest with the property being covered. Insurable interest means the person will have to suffer financial loss in case the building or structure being insured is damaged.
- The construction or renovation should be either new with future start date or project that has already started but is less than 30% complete.
- Provide the basic information of the project like location, completed total square feet, construction type, number of stories, expected start and completion date, name and address of the builder, project cost, etc.
How long can I be covered for?
The following policy terms can be offered:
- 1-shot 6-month policy
- 1-shot 9-month policy
- 1-shot 1 year policy
- Until a set policy expiration date or after the following events occur:
- Insured no longer have financial interest on the property
- The insured building is accepted as complete by the purchaser
- The insured building is abandoned with no intention of completing the project
- The insured building is put to its intended use ( example building is already occupied, leased or rented to others)
How to get Insurance for Builders?
Call the number (866) 225 – 1950 and talk to a licensed and experienced agent to get a quote right away. If you have other questions that are not covered in this article, call and get someone to walk you through in the process of getting the right insurance for you.